Wampum

But I did stay in a Holiday Inn last night. Well, not really, but that doesn't prevent me from expounding on the current economic situation. Take today's Q4 GDP release:

U.S. Growth Slowed Drastically in 4th Quarter
By PETER S. GOODMAN Published: January 31, 2008

The United States economy expanded by a disappointingly weak 0.6 percent during the last three months of 2007, the government reported Wednesday, offering the latest indication that the United States is already suffering a substantial slowdown, and perhaps a recession.

The growth from October to December came in at half the rate forecast by most economists, and it was down strikingly from the 4.9 percent clip registered last fall. Over all, the economy expanded by 2.2 percent in inflation-adjusted terms for all of 2007, the slowest rate of growth in five years.

Over on The Big Picture, a discussion erupted in comments regarding the disconnect between the falling GDP and stagnant unemployment claims; the assumption being that if the economy is slowing, more workers should be filing claims.

In a typical recessionary business cycle, that assumption would probably play out. However, this slow-down was precipitated by the pop of the housing bubble, particularly in areas such as California and Florida, an the industry on the front line, construction, has changed dramatically over the past few decades. According to the Pew Hispanic Center, the construction industry is the largest employer of undocumented workers in the US, with an estimated 1.4 million workers in some form of construction, accounting for 12% of the industry’s work force. That's a nationwide number, and is much, much higher in specific regions, namely the West and Southwest. In addition, thousands more construction workers are "day laborers", usually paid in cash and thus not eligible for unemployment benefits.

Officially, unemployment in construction in the US jumped from 6.9% to 9.4% from December 2006 to December 2007, or with 243,000 workers filing unemployment new claims during that period. What's missing, of course, are the numbers of undocumented workers who also lost their jobs, thus removing millions, even billions, of dollars from the US economy. The impact on the economies of our southern neighbors should be clearer in the next few months as well.